REFORMS TO INPATIENT CARE IN SLOVAKIA

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Eurohealth incorporating Euro Observer — Vol.23 | No.1 | 2017

Eurohealth SYSTEMS AND POLICIES 13

REFORMS TO INPATIENT CARE IN SLOVAKIA

By: Anne Spranger, Martin Smatana, Peter Pažitný, Daniela Kandilaki, Michaela Laktišová, Monika Palušková, Darina Sedláková and Ewout van Ginneken

Summary: The Slovak health system has undergone several episodes of ambitious reforms over the last 15 years. One important area of reform has been the inpatient sector. Acute care beds have been decreased by roughly 30% since the 1990s and are to be decreased further until 2030 as outlined in the Strategic Framework. A Slovenian Diagnosis Related Group (DRG-) based hospital payment is expected to become fully operational by 2022. These reforms also targeted the financial stability of the Slovak inpatient sector that has been characterised by underfunding, recurrent hospital debts and ageing infrastructure.

Keywords: Hospital Reforms, Inpatient Care, Hospital Payment, DRGs, Slovakia

Anne Spranger is a research fellow at the Department of Health Care Management, University of Technology Berlin, Germany; Martin Smatana is Director of the Institute for Health Policies, Ministry of Health, Slovakia; Peter Pažitný and Daniela Kandilaki are lecturers at the University of Economics in Prague, Czech Republic;

Michaela Laktišová is the chief analyst at the Ministry of Health in Slovakia; Monika Palušková is the chief general practitioner of Slovakia, Darina Sedláková is Head of WHO Country Office of Slovakia and Ewout van Ginneken is hub coordinator of the European Observatory on Health Systems and Policies at the University of Technology Berlin, Germany. Email:

[email protected]

Introduction

In the early 1990s, Slovakia re-introduced a statutory health insurance system, in which nearly all hospitals were in state ownership and established as budgetary contributory organisations (a Slovak form of not-for-profit legal entities established by the central government, regional government or municipality in order to perform tasks in the public interest). The Soviet legacy of oversupply of acute beds and lack of chronic care beds, medical technology and inefficient coordination proved difficult to change. Any attempts to reduce the number of hospital beds were opposed by the hospitals, as well as by local authorities.¹ The financial situation of hospitals (and their poor financial management) further deteriorated as some privately-owned hospitals entered the market with protests by health workers for higher wages in 2001. Confronted with highly indebted hospitals, as well

as recurrent allegations that hospital managers were engaging in corruption, the Slovak health system underwent a major reform between 2002 and 2004.

The reform installed market principles for health insurance and health provision and as a result, responsibility for contracting health service provision was moved away from the state towards health insurance companies (HICs). Other major aims were to improve efficiency in acute inpatient care and achieve a more effective utilisation of resources.¹

This article describes the most important reforms targeting acute inpatient care in Slovakia since 2010. These reforms did not merely aim to reduce bed capacity, but also targeted the efficiency and financial sustainability of inpatient care through changes in payment mechanisms and strategic hospital planning.

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Eurohealth SYSTEMS AND POLICIES

Eurohealth incorporating Euro Observer — Vol.23 | No.1 | 2017 14

Reforming acute inpatient care

Although transforming acute inpatient care had been addressed in previous reform programmes, the 2002 – 2004 reforms in Slovakia received much more international attention. This was also due to several controversial elements of the reform, such as transforming public hospitals into joint-stock companies, a process that has been halted twice in 2006 and after 2012 and the resulting confusion about the long-term direction of the reforms. Nonetheless, acute inpatient care in Slovakia was finally reformed following concerted efforts by HICs, the Ministry of Health and the Health Care Surveillance Authority (HCSA).

Since the early 1990s, many European countries have aimed to reduce inpatient capacity because advances in medical technology have allowed faster discharge of patients and treatment in day care settings. In line with the countries of the Visegrád 4 group, which includes the Czech Republic, Poland and Hungary, Slovakia has been able to reduce bed capacity considerably (see Figure 1).

In 2014, there were 4.9 acute care beds per 1000 population in Slovakia, reaching a comparable level to that of Poland, but still above the EU-28 average. Indeed, the Slovak Republic started out with 6.9 acute care beds per 1000 population

in 1996 and was able to decrease capacity by roughly 30% by 2014. The Strategic Framework for Health 2014–2030 aims to decrease acute care beds by another 50%.²

A hospital sector plagued by underfunding

The hospital sector has been

characterised by underfunding and ageing infrastructure. Although, the Slovak Ministry of Health had used several approaches (e.g. installing an agency called Veritel for the consolidation of health care debts), hospital debts kept accumulating and had to be settled in several “rounds” by the Ministry of Health (for an overview see Figure 2). Since 2011, debts have been creeping up again to reach a high of €592 million in June 2016.

Debt is a multi-causal problem based on underfunding, but also failing governance, lack of transparency and the introduction of minimum wages for physicians in 2011.

In theory, capital renovation of inpatient care is also covered through reimbursements by HICs to hospitals.

Yet hospital infrastructure has been deteriorating. Indeed, health care capital formation was found to be well below that of neighbouring countries. Estimates of the additional investments needed in order to meet EU-15 averages range from

€3.9 billion by the Ministry of Health ⁴ up to €8.3 billion in the worst case scenario of an independent think-tank.⁵

Reining in hospital debt

To remedy the situation, in 2017, the Ministry of Health announced plans to improve hospital governance by introducing higher compliance standards to non-debts.⁶ Furthermore, Slovakia opted for a DRG-based payment

mechanism for inpatient care. Since 2010, the implementation process has been governed by the HCSA using the German DRG-system as a base. The SK-DRG system is expected to become fully operational by 2022.

Since 2016, hospitals have been informed of the respective DRG payment for each performed procedure, but are still reimbursed according to the ‘old’

reimbursement scheme. Currently, DRGs are implemented through HICs contracts, applying various safety nets (from global budgets to a combination of old and new payment systems). This scheme is mainly based on per hospitalisation case payment for a completed case differing by specialty, but also among hospitals. The basic payment rate will be harmonised over a five year period, from individual rates in 2017 and 2018 to a single rate in 2022. Once the SK-DRG system is fully operational, hospital financing is expected to bring a higher degree of harmonisation in payments. Therefore, DRGs could help raise comparability among Slovak providers and confer important information about utilisation of resources in inpatient care.

Ambitious plans to reduce inpatient care capacity

Inpatient care is jointly planned by HICs and the Ministry of Health. First, HICs contract individual providers specifying volumes and prices for inpatient care.

In 2016, there were three HICs operating in the Slovak market: two privately run HICs and one publicly owned HIC (GHIC).

Given this highly concentrated health insurance market, HICs have large market power and can reduce acute bed numbers by not contracting providers or hospital departments. For instance, the GHIC did Figure 1: Reducing the density of acute hospitals beds but not closing the gap

with the EU average

Source: ³

beds per 100 000 population

375 425 475 525 575 625 675

Members of the EU Slovakia Poland

Hungary Czech Republic

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996

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not contract several hospital departments during 2010–2011 which resulted in a nationwide reduction of 3000 beds. It should be noted, however, that the HICs are legally obliged to guarantee sufficient availability. Second, strategic planning by the Ministry of Health sets medium to long-term goals for inpatient care. In 2002, the Ministry of Health implemented a Bed Reduction Plan, resulting in a cut of 6000 acute beds. In 2014, the Ministry of Health targeted inpatient care by setting targets in the first Slovak Strategic Framework.

By 2030, the goal is to achieve an occupancy rate of 85% (in 2014 it stood at 69%, well below the EU-28 average of 77%) and 2.5 acute beds per 1000 inhabitants through a combination of reduced bed capacities and lower inpatient cases through strengthened primary care.²³

Some providers are seen as crucial to ensure accessibility

An exception to the principles above is the so-called compulsory network of providers, which was re-introduced in 2012. This network is based on calculations of a minimum number of hospital beds for each of the eight self- governing regions and in 2016 consisted of 36 hospitals, specialised institutions and medical institutions. Minimum capacities are calculated per capita, but they do not consider the specific health care needs and resource use of the population.¹ Enlisted hospitals have to be contracted by all HICs, irrespective of their quality and effectiveness. Critics say this regulation undermines the market and that it was only established to improve the bargaining

power of public providers.⁷ Indeed, all but one provider in the compulsory network are state-owned.⁸

Despite the compulsory network, strong regional variance in inpatient care capacities in Slovakia persists (see Table 1 for an example). This highlights that the compulsory network does not ensure regional equality in access to inpatient services. The region around the capital, Bratislava, has about 60% more beds per capita than more rural areas in the Western Slovakia (Západné Slovensko).

Waiting lists remain a point of concern

Although there seems to be ample capacity as outlined above, perhaps ironically, waiting lists are a persistent problem in certain areas and for certain specialties.

The government that took office in March 2016 made reducing waiting times a policy priority.¹⁰ Waiting times in inpatient care have caused several heated debates in previous elections. In 2010, legislation on public reporting of waiting times was supposed to increase transparency and collect data for several procedures and all hospitals. In general, waiting lists should not exceed 12 months, as monitored by the HCSA. Subordinate legislation issued by the Ministry of Health regulates only three types of waiting list (hip and knee replacements, cataract surgeries and heart surgeries). The impact of this decree is difficult to estimate precisely, but according to HCSA the average waiting times in 2014 decreased compared to 2013 by 14–53%.¹¹¹ However, only one HIC (Dôvera) publishes information on waiting times and discloses this information to their insured population. Waiting times are also fuelled by weak patient management and gatekeeping by GPs. A vast majority of consultations end with a referral to a specialist or hospital, which also relates to the GP’s limited medical competences resulting from legislation in 2012. GP competences were limited to basic and administrative tasks and have been gradually broadened (e.g. pre-operative examinations and chronic care) since 2014.

Furthermore, there are still ways to see specialists without a referral even though this has been required since 2013.¹ Figure 2: Chronology of debt settlements in the Slovak health care sector since 2002

Source: ¹ mil. EUR

0 200 400 600 800 1000

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

€645 million debt relief €130 million debt relief

€310 million debt relief

Table 1: Regional variance of distribution of bed capacities in Slovakia, 2014

NUTS 2 regions Number of hospital

beds (per 1000 population)

Curative care beds in hospitals (per 1000 population)

Rehabilitative care beds in hospitals (per 1000 population)

Slovakia 5.8 4.9 0.15

Bratislavský kraj 7.6 6.8 0.24

Západné Slovensko 4.7 4.1 0.09

Stredné Slovensko 5.8 4.8 0.15

Východné Slovensko 6.2 5.2 0.16

Source: ⁹

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Conclusions

Hospital reforms in Slovakia have mainly focused on financing and strategic planning of care as a way to increase efficiency and sustainability of the sector. As the implementation of some key reforms, e.g. the introduction of the Slovak DRG system, strengthening hospital governance and improving primary care, are still ongoing, it is too early to judge whether they will achieve their goals. Some challenges remain: the HICs have to contract the compulsory network providers which may affect their ability to increase the efficiency of the system. Moreover, decreasing waiting times while simultaneously reducing beds sounds paradoxical but could be achieved by stronger gatekeeping and better patient management. How this plays out will need close monitoring and perhaps additional reforms.

Other countries seeking to reform the hospital sector can learn from the Slovakian experience. It shows that a multipronged approach is needed that not only reduces beds or reforms payment methods. First, primary care reform should go hand in hand with reducing inpatient care overcapacity. This not only includes improving the gatekeeping function and reducing unnecessary referrals, but also broadening the competences of GPs.

Second, data collection on health service usage needs to be improved before it can be used to increase transparency and accountability of inpatient providers.

Third, improving (financial) governance

of hospitals has been an often overlooked issue, although there remains great potential to make improvements. Taken together, attention to these areas can pave the way to further promote quality of inpatient health services.

References

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China has a complex pharmaceutical system that is currently undergoing significant

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of China’s pharmaceutical system and covers key

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regulation, expenditure trends, pricing and reimbursement, irrational

prescribing, traditional Chinese medicine,

industrial policy, and the role of hospitals, primary

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